Legal action over background music could lead to silent nights for James Pothitos allegedly failed to pay $12,795 in licence fees

Australia’s largest record labels have launched legal action against restaurants and cafes that fail to pay licensing fees for background music, which could see more patrons eating in silence.

The Phonographic Performance Company of Australia – which represents about 750 record companies – has also clamped down on fitness centres, shops and nightclubs that flout copyright laws.

But the aggressive enforcement program has infuriated many small business owners, who warn they will use other music exempt from Australian copyright protection, including US artists and most classical music.

The PPCA began Federal Court proceedings on Friday against South Yarra restaurant The Greek Deli and Taverna, which allegedly failed to pay $12,795 in licence fees over more than four years.

Lawyers for the PPCA demanded a $60,000 settlement from the restaurant’s owner, James Pothitos, and warned he could be liable for damages of $200,000 if the dispute went to court.

In August, the Federal Court ordered Collingwood restaurant The Cavallero to pay $2000 in overdue licence fees and almost $70,000 in damages and legal costs. The Smith Street restaurant has since been placed in administration.

Mr Pothitos declined to comment on the copyright dispute involving his Chapel Street restaurant while the matter was before court.

PPCA chief executive Dan Rosen said it was important to protect the rights of musicians and take action against businesses that ignored the relevant licensing fees.

”PPCA’s preference is to establish a licence with a business well and truly before it reaches court … those doing the right thing expect there will be some action taken when competitors attempt to gain an unfair advantage by obtaining a business input without incurring the appropriate costs,” Mr Rosen said.

A PPCA spokesman confirmed the Federal Court had also awarded damages against nightclubs, fitness centres and a beauty salon over the past two years.

But Restaurant and Catering Australia chief executive John Hart said the cost of recorded music in Australia was ”totally ridiculous”, with fees also collected by the Australian Performing Right Association, which represents individual artists and composers.

Mr Hart said restaurants and cafes were increasingly using music that was not covered by Australian copyright laws, or playing the radio.

”The reality is that the PPCA licence catalogue is not that large and a lot of our members are looking at other options. The fees they impose on us are just insane and I doubt whether they represent value in terms of a commercial return,” Mr Hart said.